Sri Lankan shares fall to over 18-month low

Reuters Staff

COLOMBO Jan 14 (Reuters) - Sri Lankan share index fell more
than 1.6 percent to more than 18-month low on Thursday due to
rising yields that led investors to shift towards risk-free
assets such as government securities amid global worries,
brokers said.

The main stock index ended 1.65 percent, or 108.17
points weaker, at 6,446.20, its lowest close since July 2, 2014.
The bourse had lost 4.93 percent so far this year as of
Wednesday's close.

"The market is falling way too fast with the continued
foreign selling and talk of big foreign funds selling Sri Lankan
shares due to global volatility," said Dimantha Mathew, research
manager at First Capital Equities (Pvt) Ltd.

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"Investors are of the view that they will likely see lower
prices and are awaiting the psychological barrier of 6,000 mark.
But we feel there is a possibility of small rebound with the
huge downturn we have seen," he said.

Stockbrokers said some foreign funds have already started
selling blue chips including the market heavyweight John Keells
Holdings and lender Commercial Bank of Ceylon
.

The bourse dipped further into an over sold territory on
Thursday with the 14-day relative strength index at 16.689
points versus Wednesday's 20.874, Thomson Reuters data showed. A
level between 30 and 70 indicates the market is neutral.

The turnover was at 978.7 million rupees ($6.81 million).

Foreign investors were net buyers fore the first time in
four sessions on Thursday due to a block deal, traders said.

They bought a net 56.6 million rupees worth of equities on
Thursday. But they have been net sellers of 2.21 billion rupees
worth of equities so far this year, compared with 4.43 billion
rupees of outflow in 2015.

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Analysts said local investors are worried of more monetary
tightening after the central bank raised commercial banks'
statutory reserve ratio by 150 basis points with effect from
Jan. 16.

The yield on 91-day t-bill rose 40 basis points to an over
three-month high of 6.78 percent in three weekly auctions since
the Dec. 30 monetary policy announcement.